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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:01

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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528

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480

TOPIC FREQUENCY

Us 23, U.s. 16, Europe 11, S&p 10, Washington 9, Israel 9, Sandy 6, China 6, Starbucks 6, Philly 6, United States 5, Chicago 5, Jon Corzine 5, Walmart 5, Geico 4, Ho 4, Sec 4, France 4, Viacom 4, Bernstein 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    November 15, 2012
    9:00 - 12:00pm EST  

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>> i filed paper work last week, and we'll see what offices are out there, but i think the lane commissi commission. >> it's time for squawk on the street. >> and she can talk fast when she wants to. a 185 point drop and the markets sti still trying to find their legs. take a look at futures, we have lost some ground after specifically claims came in with a very strange mist, some are blaming it on sandy. the euro zone falling into recession for the second time in four years although france and germany did expand, just barely seeing some red arrows in germany as well. walmart under pressure after missing on gps.
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target pulls out a bead on top and bottom line. but reaction not a whole lot better. what's the trade in black friday. >> there was there a steep selloff yesterday which put the nasdaq in correction territory. >> the head of mcdonald's u.s. business is out and jeff stratton will assume that business starting january 1. capped off last month with the first decline in monthly sales in about nine years. we'll begin with a teale of two retailers. walmart, revenues coming in short of forecast. -- as for target, the company posted third quarter earnings well above estimates, says it's poised for a strong fourth quarter, but walmart has some issues here, jim.
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they're talking countries including but not limited to brazil, china and some others too. >> yeah, i was thinking it bick, not brick. russia has been left out of the equation, foreign corrupt investigation, not a great number here at all. the stock had become a very big institutional favorite. if you recall during the mexican investigation, when "new york times" piece it, the stock was trading between 57 and 58. they were then overridden by a couple of really good, solid quarters. this was not the quarter that anyone was looking for. >> except for those who sold the stock over the last couple of weeks. i mean that stock has started to come through. >> i'm kind of confused why this one is so shocking, if only because they had -- they haven't seen even robust the last couple of months. becky did a fabulous job, because you're talking about a
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10th of the country involved. the age of walmart is the able of shopping. so what does this say? >> of course when we consider walmart as a percent of overall public retail sales. the numbers are enormous. this retailer dwarf's others by certain metrics. we think the holiday season is going to be competitive, we think we're still in a competitive retail environment and economic factors are making things somewhat difficult for our customers and that's why we're getting to those numbers. the stock had come in and it's going to again today. >> a lot of investors are thinking that this gigantic move and pull back appropriately to some average and was ready to blast off. look, you've got target nipping, you've got dollar tree reporting good numbers today. walmart had a great move. and now its great move i think has run its course. >> an amazing chart, if you go
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back to walmart stocks, the dip in the stock, it was the bryberry bottom for this quarter. i don't know if we're setting up for something better than anticipation but the head of u.s. walmart said november sales started ahead of plans. and they have got some extra sales thanks to lay away which has been a very popular program for retailers of late. >> we used to get monthly comps from all these retailers. >> those were the old days. >> i think the problem with wam mart, frankly is, the stock was acting as if it was going to put target numbers up. pets smart reported the best numbers of any retailer. the spirit has been distinguished between two types
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of countries, countries that do good numbers and often great guidance. the latter has been very rare. i agree with you walmart's guidance isn't very good. better sales, better earnings and better guidance. >> it has to be a triple play, pets smart delivered. >> 200 day on walmart, 67, getting over 70, some argue is like microsoft trying to get over 30. every time it happens, you get hopeful and then you're disappointed. >> david, forgive me, but microsoft should go private. >> 5.5 points. >> they've got a lot of cash. >> maybe you and i should put together a $5 million lump. >> you go to the justice department and say this is absolutely necessary. >> i'm going to pencil it out. >> i'm calling bomber today and
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saying, end all this embarrassment and just go private. >> it is too large to take private. the stock is very cheap, it generates an enormous amount of cash. if you say to microsoft, just run this company for cash, you would get a big return. >> the press conference yesterday, i'm watching the press conference and i'm saying, he's not talking rise above, he's doing the thing. and then first question, and i figure the first question is going to be, aren't we not going to be in a recession the moment that the fiscal cliff comes? general petraeus. >> but the second question had to do with the fiscal cliff. >> i think someone felt maybe we shouldn't just follow one general allen, or the cal east. >> there were more professor
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langley questions and petraeus than -- >> that just shows the general view of the white house press corps, they're afraid of business. >> the point of our campaign is at a certain point that business is going to -- look, there's a lot of people in this country who not only don't pay taxes, there's a lot of people in this country who don't owe dividend stocks. a lot of our audience, you need to pay taxes, which you say is going to get hit. you don't watch the stock channel if you don't have a lot of dividends. i just felt yesterday was a seminole moment. mark is going to get down here. >> i mean home depot was great. i said, oh, it really doesn't matter. we all had that. >> it was obvious. there's no branch being extended, he dug in his heels as
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is his right of course. >> which is why some argue that it's all dangerous here, that we don't have futures, at least trying to find some legs. >> europe's in recession, what happens to europe if we go into re recession. >> it's a multiplier. >> in terms of more recession? >> true. >> all of our worst fears about earnings quality deterioration, all of that gets multiplied if we go over the cliff. >> i when petsmart was at $58 yesterday, you're going to get hit. it has nothing to do with companies. >> the idea that this thing gets extended. in other words we push off the cliff, there's not enough time
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to deal with this. you're dealing with a lame duck congress so we push it off three months and we start dealing with it again next year. if we get something like that, does the market go higher. >> i think a lot of the things you saw, you go, wow, cvs was really good. maybe this is an opportunity to go buy some gnc, some companies i have been highlights on "mad money." gold four was binary, stocks are going to go down, or are we not going to go to bar, it's a binary number. >> you go off or you don't go off, but in terms of various kinds of deals that could be reached, there are a million, as to what happens. >> you could climb back up the cliff, once we fall off the cliff. >> there's a very sudden aggressive attack in gaza, who knows what's going to happen there. china, these are not reformers who are going to be on this committee, it looks like. >> some stocks are already, with
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the market down 8% from the high, if you go back to the stock that was already 9% from the high last year. a third of the stocks are beginning to bottom. they are the general mills, which general mills was up yesterday. verizon is down from 47 to 43, you figure, i'll start buying verizon, but at this point you're getting 5%, at this point it's tax free. i'm just saying that not everything falls at once. it won't fall with the same velocity. >> until the president spoke. >> i used mills as and an log for what -- commodity costs have been coming down for the last few weeks. the takers of the commodities who have a recession proof business are starting to
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outperform the 12riz industries. >> that can continue. >> you talked about companies beginning to manage down and after the bell, we get texan with some more layoffs, whether it's dow chemical or u.s. >> what's dave cody doing for every eight people who are retired, natural attrition, he's hiring one, that would be a ratio that would be 8 to 8 if there wasn't a fiscal cliff. he's very proud of his network, to keep people on this issue. are they focused on this or are they focused on when did petraeus know and what did he do about it. >> hopefully we'll get off that story when he testifies tomorrow. >> as someone who just lives and breathes stocks, i'm just wondering how they fooled the kelly air force base. i think that people don't get realized and maybe they can't
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realize until the market is down so badly. >> you've got something else that's taking up all the air in the room. >> this is the iraq war, this is the debt ceiling, and europe. >> good times. speaking of corporate shuffling, a management shift in mcdonald's, the fast food giant says it's global chief operating -- changes come in the wake of some weaker sales in mcdonald's which has taken a weaker toll of the stock. it's not often you see a lifer of mcdonald's leave, but it appears to be an admission that there is a fire in the living room when it comes to the u.s. >> this is a shocker. this is a company that's probably the best in terms of promoting lifers, lifers being people who have done remarkably well and deserve it.
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i have always promoted the culture. you had an interview with thompson. it's quite clear that there is disarray in the united states. what about these high profile firings, microsoft, pandit. not to mention lockheed-martin. >> it's been overshadowed by the petraeus scandal. the ceo was supposed to take over in january, now not because of an affair with a co-worker. >> executives are getting fired, that's not been the case in corporate america in a long time. >> mcdonald's, whatever it is, whether it's a retirement or a forced retirement, the bottom line is that the sales have not been meeting expectations. that followed the disappointment in earnings that we had seen. i mean this is a company that
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can be uviewed as being under duress right now. >> it doesn't have, if you go over the cliff at 3% yield plus doesn't really defend it. the one thing that i would point out that those who go to mcdonald's regularly are a bit shocked because they're running big promotions. the old days they had a promotion you went to the store. now you go to the store and you say, i should have come here before. >> especially when your ad budget begins with a b, as in billions. >> yes. >> europe's double dip, the euro zone now officially in recession again. what does that mean for investors here in the u.s. then later on, lieutenant governor gavin knnewsom. we'll see what happens when we
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open in just about 5 -- 15 minutes.
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it's not just the fiscal cliff that europe's worrying about these days. new data shows the euro zone is slipping back into recession for the third time in four years.
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gdp shrank. not entirely a surprise, but this just re-enforces what we know and that is that europe is in trouble and if we go over the cliff, that trouble for europe will in fact be deeper. >> i think that maybe you won't realize how tough things are in the country until your friend or neighbor is laid off. but you could impact europe more than ourselves and euro. china can offset it if the new communist party comes in and does things right. we need better numbers here. the average real earnings, the latest staticists came out, they were miserable. .2%. fell .2%. i'm looking through all the earnings reports to try to find something to say positive. they're not bad, but no one wants to say things are going to get better.
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>> and the jobless returns a little bit better. but we're not going to get any clean data for months at this point. but we did see the drop in futures and the knee jerk reaction. >> i think it's easier for people who own stocks to say i bought this really good company home depot, that's really going to be helped by sandy. why is that affected by the fiscal cliff? it's very hard to relate the two, but if you go through some verbiage last night, why didn't they come out with robust guidance? they watch us. >> and it's not just business that is on hold and has been for quite some time that's making additional expenditures. we're all just saying, okay, it's november 15, why would i put any new capital out in any significant way at this point. >> the absence of buyers and guys --
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>> and worries about the underlying. >> there's always rise above. >> usa today? >> the next section is the sports section, but i still love to get lost in it. >> ra dickey, the cy young awards. >> 27 of 32 first place votes? >> yes. >> he wrote a great uplifting book by the way, he's very bright. >> a very smart interesting man. 38 years old. knuckleball knuckleballer. one of the few bright spots. >> last night on "mad money," cramer gave you some good surprise. and later on, betting on big data, we'll talk with zachary bogue, and matt ocko. let's take a look at futures one more time. mixed bag here, we'll see how he opens in just a few minutes, more "squawk on the street" straight ahead.
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two minutes before the bell. let's get jim's take on the bakken shares. >> this was "the washington post" article was terrific, "squawk box" is so amazing today. i just loved it. and the global head of real estate for kkr, they're putting up apartments in this williston
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area. the company that has both of them, eog, continental resources in the bakken. these stocks are going to go down like everything else, because this is where we are. we're going to have a long haul truck that the engine is going to go out in 2013. that is going to be taking advantage of the natural gas. everybody should be reading "the washington post" journal. this is the bright spot. what's the bright spot? it is fossil fuel. but i know that i'm looking at buying a generator like my friend joe kirnen has. i can buy a machine that makes me fuel up without gas. i just need ford and gm to give me the cars. >> crude spikes, these companies can help you envision a day that a headline out of that part of the world doesn't mean oil has to become a expensive.
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>> we're talking about a duplicate fuel system that makes it so that we're no longer hostage. that's so imperative on a national defense basis, but it is not the focus in washington. petraeus and then cliff. >> meet one of the so-called patriotic millionaries which is asking the government to pay more in taxes and the citi shareholders. and how are walmart and target open for trading? we're going to get the answer to that in just about 4 1/2 minutes. "todatoday a full hour with.
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well, having a ton of locations doesn't hurt. and my daughter loves the santa. oh, ah sir. that is a customer.
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let's not tell mom. [ male announcer ] break from the holiday stress. fedex office. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks,
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or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. and welcome back. we're getting ready for the opening bell here on "squawk on the street." we're just a couple of minutes away from the open and this after a terrible day in the market. the s&p is down 7% since its september 14 peak, as is the dow. the nasdaq meantime is in correction territory. officially down 10% from its september 14th high. what a way we have seen that we
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have seen since the peak, when apple was more than $700 a share. >> this is not the -- i always hate to -- that's what someone last night today why did you not like five below? i thought you likes five below. this is one of those companies that you distinguish between 5 below and the stock. everyone's got a profit and they're thinking well, wait a second, who know what is the capital gains is. >> of course by the way you sell, it doesn't mean that you get back in, you get back in at a lower cost basis. >> i see lockheed bottom, i am happy to go in. cvs. but i got to see it? because who wants to see another
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press conference and get your head bashed in. >> there's the opening bell on wall street. designer manufacturer and district for of ac drives. so this is a very big open here. see where the markets are settling. we'll definitely be watching in today's session, at of the retailers of course. but monster, another big one we're watching. but energy drinks as a category is linked to adverse events and hospitalizations which is not a good thing when you're in that industry, you're looking at potential. and maybe warning labelis which are not a good thing either. >> the corner of a -- it's a triangle, jim. >> there's no resting place. here's the deal with monster.
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monster's last conference call, they did this remarkable test versus starbucks, and said they had less caffeine than starbucks, i actually bought a box of them at costco. i had to save them for -- and no, i mean these are really, i think, off the reservation, the five-hours. >> to say they have less caffeine than -- if i were a consumer looking for a caffeine jolt, they're saying that starbucks has more caffeine and is not linked to any adverse events. but starbucks is saying why are you lumping us into the 5-hour. maybe you should have -- at the same time the government is a -- the government doesn't come in and say, you know what? we like some energy drinks and not others. we don't like energy drinks, who
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needs it? it's like war, what is it good for? absolutely nothing. >> let's get to kayla because the house financial services summary has come in with its full report on the mf global. >> the gop members of the house oversight committee and it pretty much pins all the blame on ceo jon corzine. he was the chief trader and he was the one who saddled the company with sovereign debt. but it doesn't limit the risks or the blame here with -- the house going on to recommend that, the sec failed to share critical info about the health of mf global and also the credit rating agencies did not identify the risks or didn't do a good enough job of identifying the
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risk. they identified that sovereign risk, but it was in footnotes and there was some confusion among investors. so it's being blamed on the regulators. mf global was not forth right about its liquidity position. this is ultimate what brought the brokerage down. we had an interview with corzine who said that the board impmented all the strategies, but the he said she said game will continue. and we'll have a little bit more for you later today. >> meantime, as far as what we continue to watch in the markets--ed with what the latest quarterly report, which is quite good, it's pretty flat. but we do have paul jacobs on "fast money" tonight. >> and paul told a really good
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story when he was with us, and qualcomm comes under the category again, please watch this stock, better earnings, better sales, fab plus outlook. i'm not a chartist but that someone is going to say oh, that's a failed double talk. i have very many reasons to sell and very few reasons to own. if you did get a shock announcement from washington saying what david was saying, listen, we're agreeing to spend some time. you're going to say why did i buy qualcomm? there are some stocks that are going to bottom here. it's just that there's not as many. >> if you saw a headline, boehner-obama to agree to long-term solution, you would hit buy first on com? >> we no longer have to worry about rising above? >> i think we'll see that as a joke.
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>> only up 3% to 5% between now and tuesday. that's not their focus. >> i understand. >> but remember when germany went down, when the german forces went down. those are countries that are dominated by rich people. a lot of those companies are plutocrasies. i think when their market went down, they said holy cow, maybe we ought to do something, maybe monty ought to get together, our country t.a.r.p., that first vote, i think people said, okay, i'm going to have to work the rest of my life, there goes my 401(k) and the congressmen rise above. i hope it doesn't take that. i hope it didn't. >> we do have some media news today, viacom is out with some numbers. >> viacom is not as bad as i had feared. the market numbers down about 6% for the company which is perhaps a little bit better than might
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have been expected. if you take a look over the last few weeks has been down somewhat dramatically. look at that. and so there was an expectation built in that the company might miss the quarter. it doesn't, in fact on the bottom line, it exceeded many of the estimates and the analysts who follow it. you're heading into fourth quarter. we are getting some headlines out of that, from the company's ceo. don't expect to see growth and add revenue. it's expected to reach 10% in domestic revenue this year, but the stock holding in there, again, given how much of it is sold off, it's not as bad as the quarter. viacom bought back $700 million worth of stocks. $14.2 million worth of sales in the quarter. the underlying story in media for many of these companies, because it wasn't a great quarter, this is the last of the media companies that i recall that will be reporting.
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is the continued repurchasing of shares. viacom has been borrowing, you can actually borrow so cheaply that you can require debt, not only to have a creative to eps, but also have it to cash flow. your interest payments are tax deductible. you're retiring dividend paying stock. >> tell me when that was the case. >> it hasn't ever been the case. >> you talked about the idea of the marginal dollar should be to take your company private. >> time-warner buying significant amounts of stock back. news corp buying significant amounts of stock back. so that is a theme here. but the media showing else the uncertainty about the future economy, we're not sure where we're headed, scattered and so forth. >> this is the nonfiscal cliff,
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mlts believing in themselves roerm. because you at home don't want to buy it so we'll take it. >> hate to think where we would be without it, without this whole phenomenon during this year. >> bernanke hasn't talked about how that would be balance repair. >> i will tell you right now -- >> i'm trying to be positive. >> forget it, nothing happening in the next six weeks. >> too many holiday parties. >> let's worry, maybe next year. >> five more days until my kids are back. >> reporter: well, folks, happy thursday. this means one week to happy thanksgiving. people here are exhausted. they are trying to find any possible iteration to defying the fiscal cliff. i just talked to a trade never
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an investment conference that i talk to all the time. he said stock, mutual fun and etf sellers are everywhere in this conference are concerned about taxes and the fiscal cliff. general depression is what's going on right now. the big beneficiary, if it has to be one, big exchange trading funds. i have written got this extensively. there's been big volume in etfs since the election, but really the whole month of november. volumes up about 40%. the xlft financial etf up. china is up notably, because we have a power transition in the next few months. one other beneficiary, big volume in any kind of volatility etfs, the vfx, people are
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predicting a lot of volatility. the vix is sitting around 18 and a lot of people are scratching their heads trying to figure out what's going on. why isn't the volatility up? i think there's a very good explanation. the options guys are selling puts. they were huge buyers of puts. but the s&p is what, 13.50 right now? they have got all of these puts that are in the money. the big guys who have gone out for protection. they're selling puts right now, they're not buying them. they're all in the money. that's one of the reasons the s volatility has been on the down side. sales there, generally to the down side, down 11%. china down as well. india's up a little bit. and by the way, purchases of gold using etfs. 56% increase in their volume.
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that's because a lot of people went out in the third quarter when there was concerns about inflation and kwan kwan todayive easing. guys back to you. >> terrific report, bob. i'm watching the market go up, so much like i used to trade with karen cramer in 1999. the market is up. tareq aziz. was boehner at the country club, that's where we are. >> let's shift to the bond on the dollar. >> jim, if you look at today's action in the treasury, there wasn't a lot of action, if you look at the day chart, we didn't go up very my basis points. on thursday when we saw the big jump in claims, even though it's
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largely responding to issues related to logistics of sandy and compiling the data, we still made the lower yield of the day, though we're going nowhere quickly. if you want to see meat on the bones, open this chart up for several months. the 160 level is very significant in the sideways pattern in terms of a floor or a pivot. but the prize of the day for real activity, real movement is the dollar-yen, look at this two-day chart. how many two-day charts of dollar-yen do you see 2.5% appreciation of the dollar versus that currency, japan is in turmoil with respect to their current government, will it be resolved. the other part wanting to take over and if you open the chart up, these are volumes in the dollar-yen going back to april.
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melis melissa, back to you. >> youtube's bono is worried about a different kind of edge. unanimous haworth is in the house subcommittee report. and this morning's early movers here on wall street. netapp at the top of the list with 11%. sometimes investing opportunities are hard to spot.
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a deal on the fiscal cliff is a huge opportunity. >> let's rise above the dysfunction for our country. >> it's time to rise above politics. >> for your rise above bid, go to riseabove.cnbc.com. it's not just investors and politicians, but u-2's bono is worried about his fiscal cliff too. he discussed wit the world bank
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president. here's what he said. >> there's so much pain coming from the economic downturn and recession and this fiscal cliff which is why i'm in town because there's real jeopardy, you know, if this sequestration, should it happen, we know there's going to be cuts, we understand them, but not cuts that cost lives. >> you know you've reached a critical mass when you have the front man of a well known band talking about sequestration. >> steve jobs, there were very few people he believed in. but the one guy he always wanted in his corner was bono. he wanted him in his economic segment because he's so smart. >> have you ever met him. >> no. >> i have. >> you have? >> i met him up in dabos.
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>> partied with him? >> it was a late night. but we just spent a little time with him and i was with andrew sorken, he said can we do lunch sometime? can i get your number? he said i'll find you. >> i can't believe you just gave that on air. that's great. >> that's my new one. >> the big news, was he found? >> i don't know. >> we got to get andrew on the show now. >> maybe he'll phone in. >> get an update. today on the closing bell the two men behind simpson bowls deficit reduction plan which has been touted as the answer to the fiscal cliff. >> meantime, duelling earnings from discount retail rivals walmart versus target. which store chain is your best bet as we go into the holiday shopping season. but first -- >> coming up, investigating in
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market can be a dirty, muddy, ugly race. but we have got cramer here to steer you in the right directions. six stocks in 60 seconds is next. now go hit the showers, we'll be right back.
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simon, what's coming up on the show, simon. >> a really interesting second hour today, did you buy walmart? the founder of -- he wants to pay more taxes and also we're going to talk to the shareholder in citigroup who wants to break the bank up and sell it off to get this, a group of nuns. let's get six in 60, six stocks in 60 seconds. i always love to ask you about teen retail. >> i think inside they're trying to find the next abercrombie, it's a decent attempt.
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>> time-warner cable? >> the free cash flow here is amazing, i got to tell you, these gamble stocks have been great. >> what a more for insurers. >> this insurer, it's been killed, it's very well run, i prefer others to the travelers. your rates are going up if you have sure property. suntrust likes timkin. >> they have a japan chinese operation. >> express scripts? >> cvs is against them, i don't want to complete with cvs. >> mill less than yal media? >> i wouldn't give up on this company. >> what's up tonight. >> heartland payments, this is a company that had secured breach a while ago, and it's recovering.
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they have been unbelievably good. american express, not as good. >> all three averages are single digit gains, not double digit gains. the dow is a few hundred points from the way it started 2012. >> this is phenomenal because we're now underperforming france. a lot of people that france is going through a terrible recession. the average european stock market is now above where our dow is. are we really that worse off? no, it's just because we have a fiscal cliff. it's a sad, sad thing that is occurring. >> i'm sensing that your negative sentiment that europe's not getting better, that politicians are distracted by other things less important, that's not changed? >> panetta's comments about the military, why are so many top generals ethically challenged? i will say this, i'm looking at stocks that have the potential to be able to stabilize here as
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they did during the debt ceiling, these are domestic companies with a really good yield, good companies that benefit from decline in commodity costs that's going on worldwide. >> the short interest is not abnormally high. >> we don't have a cushion. because a lot of hedge funds, by the way, a lot of hedge funds are trying to lock in their gains right now because they felt they didn't do it fast enough last year. hedge funds trying to sell stocks because of the fiscal cliff. you get a reversal of fiscal cliff, they both reverse and we go back on this growth track, i hope washington knows this is at stake. i don't think they do yet. >> jim, we'll join you tonight. we'll get philly fed at the top of the hour. and we'll talk to rich bernstein, former merrill guy, a guy talking about making money in spite of all these fiscal worries. [ female announcer ] e-trade technology
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all right, we are awaiting
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philly fed. but we want to get you caught up on the markets. keep in mind where we were coming from yesterday, steep selloff into the last hour of trade with the nasdaq entering officially correction territory from the september 14 peak, the dow and the s&p now down about 7% since that peak. facebook was a big mover in that session, the stock down 8%. that's after 804 million shares eligible to come to market. >> almost 13%. >> now giving up some of those gains today, down about 3%. let's take a look at some of the big box retailers, walmart and target, walmart disappointing when it comes to the revenue side. target, different story there, but almost the same reaction, the stocks are trading lower at this time. we are closing in at the top of the hour, so now let's get some
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breaking economic news. let's head over to rick santelli in chicago. >> this is our second november number of the day, empire was negative, but not as negative. here we go. philadelphia fed, minus 10.7%. this is a bit of a shocker, we're looking for a positive number, last month, 5.7% isn't revised and it broke a snap of five negatives in a row, 5.7% here we go at 10.7. in those string of negatives from may towards september, the lastest was 16.6 and the last one for september was 5.9. we slipped back under 150, what we call a pivot for the ten-year note year and another day of
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negative ek witz r witties and this certainly doesn't seem to be helping that scenario. >> we had a rally in the last three minutes and we're down to the low of the session. if you combine with what empire said today, steve, what are we left with? >> the empire was better than expected because the philly fed is saying right at the top of their release that this is a number affected by hurricane sandy. it said firms responding to the business outlook said that numbers were down following the effects of hurricane 157bdy on the region. they do point out that a lot of the expectation numbers are back to where they previous lly were. i want to look at the table in terms of some of the various components of it. in november, business conditions were down 10.7 as we said. new orders were negative.
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everything was negative in the near term. the six-month, though, it doesn't nearly as negative. 20, versus 10.7. so i think they're sort of looking through, they did have a decline, though, number of employees did drop, however. so let's take a look at it. what we have and what we're going to have, i think, carl, for the next several months, you have that 7,000 increase in jobless claims, that was clearly sandy related according to the folks over at the labor department and then this drop, there's the empire state which was better than expected. it went up actually .94% and better than expectation. cpi, .1% and the core you have shelter going up a little bit more than it had gone up. so we don't have any good numbers, but the thing for the market right now, guys is just how bad these numbers are given that there was this major storm
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in the northeast. >> we knew the data was going to be noisy here in the coming week, steve, is the level of noise about what you expected to see? >> yeah, it's really hard to know, i'll tell you why, we have not had a storm like this impact such a wide area like this, which with so many people, the density of the area affected never happened before. when the storms hit florida, frankly they do hit areas and they hit them hard. so many people that live in the area, you have not had this. so it's really hard to know, carl, the 439 plus 78,000, doesn't seem like that much. i have seen estimates that claims could go up as high as 500,000 or higher. so that's something to look out for. how much drop you would expect and why we see it in philly and not in empire state, which arguably should have been more impacted than philly fed, of course you are, philly is down in that southern new jersey area that was hit by a lot of rain, that's possible. i honestly have to answer your
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question, carl, by saying i did not know what to expect, except that beyond noisy, i expected it to be negative. >> also double dose of big box retail earnings this morning, walmart and target both beating estimates on the top line, but walmart did -- patrick mckeeve, that neutral looks awfully pressure right now. what is your response to how they did? >> the sales were disappointing, they comped up 1.5%, walmart u.s. and i think there were some expectations that they might hit the high end of the guided range of 1% to 3%. they had a pretty update investor event in early october in arkansas at corporate headquarters and the talks from management really did seem to
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show that they adjusted better. sam's club saw a little bit of a deceleration and they came in a bit lower as well. >> does that explain the reaction today or do you think it's a combination of the guidance, the comps and the new layers to this internal probe? >> i think it's largely that the stock was probably pricing in close to a 3% comp for walmart u.s. i think that's really the main factor here. i think the fourth quarter guidance is from a sales stand point anyway, relatively in line and i don't know that there's that much focus on these new revelations, if you want to call them that. >> i am curious, though, patrick, we all know that the stock went straight up after the "new york times" reported the unlesses in mexico. dow don't think this could be -- >> i mean the stock has performed well in the face of these mexico bribery allegations
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and this ongoing investigation. so i think the investment community has largely discounted that. and, you know, i haven't had a chance to fully read through what they talked about this morning as it relates to other countries, but it didn't seem like it was that big of a deal. so nothing too incremental there, and i don't think that's having a big impact on the stock this morning. it's really sales, this is all about sales and whether or not walmart can comp better than 1.5% to 2%. and what we saw this morning seems to suggest that that will be the pattern going forward. >> patrick, in advance of the earnings we got, "the wall street journal" did a piece that walmart is becoming more like amazon and has some important new apps they will be debuting this christmas season. is there any impact on the stocks with that kind of approach. >> they somewhere certainly invested a lot of money into
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walmart.com. they have got some great people that are running the show there and they have got some very interesting things going on from an app stand point, they're at the head of the curve, no doubt about it. but that's largely priced in, i think the focus will continue to be more on bricks and mortar and how the walmart supercenters are doing in the u.s. traffic was up only 0.1% in the quarter. that's not great. >> contrast to the walmart results with what target is saying today. >> target was no big surprises with target, they already reported their sales for the third quarter a couple of weeks ago, they had a 2.9% increase, so better than walmart u.s. at 1.5%. so no surprises in the print and the guidance is pretty much in line, their call starts at 10:30, so they did not give any sales guidance yet, they did not give that in the press release, i these they'll hear that on the 10:30 conference call.
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i think that's conservative, even things like this partnership with neiman marcus that they're doing over the holiday, could push it more toward 3.5% or 4%. but only modeling the 3%. >> what about the spectrum of your universe, your most favorites, your least favorites? >> target's been a top pick here. i'm not supernegative at walmart, i as applaud what we have seen at walmart u.s., we have return to positive comps, i like neil simon, i think he's doing a great job. and they did go up against their first positive comparison in the first quarter of 2010 and they comped positively against that. so it's not a bad story, i'm neutral on the stock, i think it's currently overvalued at its current price. >> israel launching a major
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defense against palestinian militants in gas sachlt we'll take you live to gaza, plus the impact it could have on the energy prices here in the u.s. citi shares trading well below book value and several share holders requesting the board do a breakup of it's shares. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.
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let's get to a market flash. >> we're looking at some of the s&p lows today, a number of energy names there. a couple of headlines crossing th that -- on a civil complaint charge there, of course the utilities have been under a lot of pressure, guys, since superstorm sandy. back to you. >> can. thank you very much for that. we're watching oil prices one day after israel carried out a series of air strikes in the gaza strip that killed one of hamas leaders. the managing director at the
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lrksz ind group. what do you see now on the oil market. >> you're playing israel, if israel invades on land and then decides to go into the trip, then you know that's u.s. escalation you're looking for, the unknown is what will drive the oil price, not that anybody's cutting off the oil, but it could happen. we don't snknow itcf that's goio draw in iran. it's all happening after the election. i think the president had a deal, the deal was do nothing while we're running. syria is right on the border with the problem, this whole thing is coming apart right in front of us a and while we have talked about it for a long time, each month that goes by, israel wants to get more aggressive and now what's to stop them? >> there is a bbc report suggesting that obama and netanyahu have done a deal on the length and the duration of the attacks. "the washington post" this
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morning is fairly hawkish on what is going on. it talks about if it is drawn out, triggering potentially a barrage of retaliatory attacks from many sides and then worsening relations between egypt and israel. that doesn't necessarily though still knock on to the oil trade, does it? >> no, it really doesn't. that's what we have to keep watching. the bad word we don't want to hear is iran, obviously. iran is going to give missiles, that's a given. the question is what does iran do, if they poise troops, it will open up completely and it gives israel all it needs and they will attack and attack hard in iran. >> the qe 4 may be on the cards for next year, are you disappointed that it hasn't done more for the markets? >> they did a good job last time in starting to go after the housing market, the problem is they can't just throw a qe-4 out there, it has to be a pinpoint target, change lending
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standards, make things happen, get congress together. what about infrastructure? we don't hear a word about it. so i think what the fed is going to do, they'll say we'll do something, but get congress to act, the election is over, now get together and do your job. >> to the up side, what levels are you looking at for wti and brent? i think the react sthun to yesterday's move was they were surprised that it wasn't bigger given what was going on between israel and gaza. >> if you look at gold, it's down about $15 today. so the market is not buying into the fact that this will escalate into anything beyond the strip itself. then you can add to the minimum of wti and brent instantly. so far the drop in gold, which is another way of looking at oil in us own way is telling you things aren't yet escalating to the point where you should worry about that. >> particularly if you have the bank of japan with the prospect now of printing money end lelee.
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still getting a few reports from the house financial services -- kayla is going through all that. >> it appears that much of the real estate in this report is due to the lack of regulation with mf global. the lack of communication between the ftc and the cftc, a select few companies operate in two separate areas that are regulated by the ftc and the cftc, at a point where $20 million was -- the cftc -- mary happen pirro where she calls it unacceptable to transfer that money without sec's knowledge. the recommendation from the house is to merge the ftc and
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the cftc or to streamline the operations there. mf gloeblg was a primary deal in the treasury securities and the new york fed has more oversight over how they actually judge whether an institution can be a primary deal in those situations. also there's some information about how the executives at mf global characterize the security issues at mf global, behind the scenes there's some talk about what type of situation they were in was much more dire than what the executives were calling for on the earnings call. the sec will investigated whether henry steamcamp violated securities law in presenting fairly strong liquidity -- is ratings agency, the report saying the ratings agency did not per sue fundamental information. we know that mf global exposed those in footnotes but that
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should have been -- coming up in this hour, congresswoman nan haworth who is the head of the oversight committee. coming up next, honey i shrunk the bank. we'll sit down with one of those frustrated shareholders next. plus where does the ceo of royal dutch shell see happening to the stock? we'll see in just a moment. ♪ ♪
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the food and drug administration is confirming this morning that yet another caffeine drink, this time 5-hour energy may have been involved in a number of deaths, in fact 13
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deaths. herb greenberg joins us. >> energy drinks have been circulate forgive years. i have been writing about monster for several years, among the issues, health issues at the time were energy drinks and blood pressure, the big question is why now? why are we now getting these stories of deaths? you have to give credit to new york times reporter barry meyer. the fda files that monster energy has been listed in filings since 2009. monster which has been mentioned in the past has been trying to distance itself from the health concerns saying that its drinks have less caffeine than a half of starbucks coffee. starbucks does not have to include warning labels. and starbucks does not have to
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add-taurean, perhaps the most important question here, where does this put energy drinks in ten years? i don't know. i would expect the controversy doesn't end. when you look down the road, the issue of advertising to teens is going to be in the very least a big part of where this story heads. >> we know you've been following it for a long time. thanks so much for following it today. more on the controversy over in gaza, we want to britain in amon on some of the developments in gaza. >> reporter: you can probably see behind me, it's dark. this is one of gaza city's main streets, it's usually bustling this time of night, but it is a sign really of the kinds of anxieties and the tensions here. only supermarkets and pharmacies are open. on our way in, we saw about
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three dozen or so international aid workers from the united nations, all of them were evacuating gaza, even for the international organizations here that are often times considered immune in this conflict they feel the situation is becoming too dangerous and many of them are fleeing, so it is a sign that conditions continue to worsen during the day. the breaking up of big banks, it's a conversation that continues to stir son wall street. citigroup is the bank involved in the latest call to possibly split apart. citigroup is among his firms top ten holdings, matthew, it's great to see you. and you filed a proposal on behalf of some shareholders of yours, essentially asking citi to explore breaking up the bank along business lines, so potentially that could be four separate businesses. what has prompted this? >> what prompted this was we were looking at the large banks,
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the banks that were too big to fail and when we looked at the relative valuations, we looked at the city to be one with the most up sides when concerned with this type of action, when we look at anything, we look at the governing positions. we established a position and are asking them to look at what could the vol be in terms of the potential if we were to unlock this valuation by breaking this up. >> the business lines retail bank, an investment bank, a trust company and a credit card company. according to your back of the envelope calculations what, could that be at this point. >> we estimate it could be up about 50%. there's lots of variations on what they determine what is the best way to do this in the outcome? we think there's up to 50% up sides on trying to unlock the
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value here. >> they just fired their ceo, they just put in a new ceo. it's clear that this board of direct fors has taken more control perhaps than they have been in the past. why not give them some time to at least see what their strategy is going to be before you sort of get into the mix? >> we see ourselves as a fiduciary and an owner and having a role to play and we think michael corbat and michael o'neill has chairman are honorable people who have demonstrated capabilities in the financial services industry. and this man has responded slightly positively to our suggestions. >> you haven't had any conversations with management, have you? >> we have made calls them and we're now suggesting that the board take this up and look at appointing a committee to look at in. >> managers don't like to do
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this, they like to build empires so they can make more. >> certainly the financial supermarkets have gotten -- the idea was that the, you know, scale was the answer. and we take, you know, we looked at the fact that we have also had the call from sandy wiles who created this saying it could be broken up and it should be looked at being separated. we have had two former ceos, we have had two former fed chairs. >> how relevant is it that these very big banks will have to have higher capital reserves because they are so systemically important and they're still working out the detail of that, because if you are still at citigroup or jp more gang, it's obviously not a cost advantage. >> right.
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we think when you look at the plays, there's value creation by being a -- so when we go through and look at the four lines of business, we think they would be value creation by simply focussing, each of them focusing on what they're good at. they're pretty good at a lot of things, and so why citigroup, we think they actually have a valuable franchise. >> so simon's point, being focused on things that jyou're good at doesn't necessarily mean your costs will be lower than when your a supermarket? >> you look independent credit card companies or independent retail banks and they are trading at significant premiums, as a matter of fact you look at every single one of those four lines and all of the market comps traded premiums to citigroup. >> just floating it is enough,
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you don't have to have potential buyers, the mere flotation will -- wow. >> you're not typically an activist, you're a billion dollars or so -- >> wire at $21 billion, we're viewed as activist shareholders and i would say we should be viewed as good fiduciaries of capital. >> do you have any real hope that this is going to get any traction. >> absolutely. >> why. >> i think there's tremendous support broadly, and if they don't do it, they're going to look at government trying to look at the whole issue of the systemic risk of the too big to fail banks. i would rather they be at the front of this, moving forward and thinking about it now and taking action and being one of the first to take action and unlock that value rather than biting for the government to take action. >> to make them do it. >> to make them do it, right. >> have you had any success in
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the past -- >> we have been successful with many companies on suggesting changes. >> but you have never had a proxy fight, have you? >> the answer is no, we have never had a proxy fight to change the board, we have had plenty of shareholder proposals obviously. >> you're earning money on behalf of the benedictine sisters, do you have to ask permission? what did the nuns said. >> we did actually have a dialogue with them and it is an issue of concern to them. while we came up with this we think is a good idea, they were indeed in dialogue with us and very much view themselves as -- they view it as a fiduciary obligation to do what's in the best interests of the nuns. >> if the bank doesn't do it, just rap their knuckles with a ruler. it works with my kids. >> oh, carl.
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>> let's get some breaking news, natural gas inventories. >> simon, natural gas prices are selling off right now as the energy department just reported that natural supplies fell for the first time in this winter season but they fell by less than what some analysts were anticipating, the decline of 18 billion cubic feet was what the energy department reported today and we are looking at natural gas prices that were trading at near their highest levels for 2012 a few minutes before this report came out and we're down about 10 cents or so from the session high. we are looking at a situation where natural gas has recovered from the situation back in april when it was trading below $2. royal dutch shell actually sees a lot of long-term benefits in natural gas, in fact they're investing $20 billion over the next three years in natural gas products around the globe.
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i spoke exclusively with the ceo of dutch shell. this is where part of that $20 billion is going. >> pursuing ford options here in the u.s. to do something with the natural gas. one is to go into chemicals, which then can be used for manufacturing industries. second one is using gas to go into liquids, generating synthetic diesel, et cetera. the third one is gas and transport for trucks and shipping industries and the last one is the exports out of the u.s. >> well, of course the international energy agency did say that the u.s. will become a net exporter of natural gas by 2020. and one of the big developments that they're doing with shell is to try to re-create that state of the art facility that they built in qatar, they're looking along the gulf area for locations here in the u.s. and that will be a perhaps transformative development here in the gas industry if that does
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occur, when that does occuoccur. >> nice stuff this morning. when we come back, wall street legend stops by to tell es why today historically this is a key trading day for a lot of hedge funds, that's coming up next. central b ♪
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. breaking news with regard to
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yuan nighted airlines. united tweeting out just a few minutes ago, confirming reports that we have seen throughout the country, saying that we have another computer outage, saying that passengers may be stranded throughout the united states. and we have had reports that these passengers may be stranded for up to two hours. we are monitoring the situation. for the second time in three months a major computer outage has united essentially grounding flights at many airports arrange the united states. >> i'm reminded of the interview you had just a couple of months ago who said our operations this summer were a mess. it seems like a tough chant tore follow na with. >> and as he said at the time, we have fixed all of the problem, but clearly there is another issue for computer systems at united. >> this is a very -- why the
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125th over all the other trading days. director of floor operations for uvs joins us this morning. what is it about the 15th? >> five years ago would have been extraordinarily dramatic. the 15th was the last day on which you, if you were a hedge fund shareholder could notify the hedge fund that you wanted to make a withdrawal by year end. and that would then dictate a lot of the trading by the hedge funds. if they were going to have big redemptio redemptions, they had to convert a lot to cash and make it ready for your withdrawal at the beginning of the year. the hedge funds found themselves not wanting to be at risk at the last moment of being forced to sell product that might be very, very cheap in the long run. so many have adjusted their proposals. so it is not as important as it used to be.
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it still works at several hedge funds but many have found other ways to deal with it. >> it's the last day you can get told, but they still have the o'until the end of the year to deal with some of these redemptions. >> in 2008, it wasn't just one bad day, you went through weekses and weeks of bad times if you had something that was down 20%, if you hesitated, it could go down 30%. >> now we have got redemption periods. some have one, others have six months, it's all over the map and it hasn't been a bad year for hedge funds, but there's going to be significant across the board redenverations. >> and in emergencies, some of them have clauses that they can inge vote. almost like force due your, we'll hold your money but you
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have to have it here for another 90 days. >> do you think this is any part of what we have seen since before the election and since the election we have soon a hassive decline. the stp has lost about $600 bill i don't think in market cap. those are the figures crunched early this morning. so the issue of november 15 being a key day, did that precip date some of the selling? >> i think that might be a very, very mild faction. i think the trading is due to the fiscal cliff. it is the concern that perhaps both sides will take the calculated risk to say the other guy will get blamed or in the long run this will work to my advantage and that we may be headed instead of compromise to a shoot-out at the ok corral. that's a little bit of what bothered the market yesterday during the press conference when the president seemed not ready to compromise, but rather --
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about what he wanted to do about the tax increases. >> the situation in gaza is real and getting worse rather quickly. and yet crude's off 30 cents. >> in its own perverse way, the key countries are gaza, israel, and egypt which is somewhat destabilized by who's going on, are not really oil producers. we know it's the region and if you begin to hear threats popping up from iran and others that israel had better mind its ps and qs. we'll watch and see how it goes. >> republicans on the house panel investigating the clams of mf global are pinning the blame squarely on ceo jon corzine. plus a group of america's healthy are pleading to be
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taxedmore. the so called patriotic millionaires on their second day of a two-day congress fenferenc. we'll see what garrett gruner says on taxation, he's worth nearly $100 million. that's next. [ male announcer ] when it comes to the financial obstacles military families face, we understand. at usaa, we know military life is different. we've been there. that's why every bit of financial advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad! dad! [ applause ] ♪ [ male announcer ] life brings obstacles. usaa brings advice. call or visit us online. we're ready to help.
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it's not something you hear too often. warren buffett said it but it's still not that often. nobody really asks to have their taxes raised. thank you for being with us on cnbc. >> good to be here. >> you make a very, very
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important point. that the american economy as far as you're concerned is a bigger insenltsive for marginal growth that tax station. how do you argue that through. >> taxation for folks at the top end is at historically low levels and i believe that that's a big problem for our country, it's a problem for our economy, that's why we're walking the halls of congress today to try to get them to restore the levels that existed under the clinton administration when we had much higher growth. >> you say that it's no coincidence that the two highest peaks came in 1929 and 2008 and both were followed by periods of sub par growth. why was that in your view? >> i think what happens is that -- first of all, i don't think it's just correlation, i think it's causization, and i think the reason for that is that ultimately too much of society's capital engz ends up in the hands of too few. people end up highly indebted
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and you have a collapse of command. there's precisely the scenario that's happened both in 1929 and again here in 2008. >> mitt romney just forged an election campaign in which he suggested that lower rates of marginal taxation is would be good for the economy and 59 million people voted for him. why don't those 59 a million people get what you're saying in your view? >> i'm a venture capitalist, my job is investing in small high-tech nothing companies and helping them to grow. i have made many, many decisions of this sort and my firm has made hundreds. and literally not once, and i mean that, not once have we everybody taken marginal tax rates into consideration as a reason to invest or not invest. and the reason for that is simple. we're looking for large amounts of growth not just a few percentage points one way or the other. i think the republican party has
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a theory, and i think they're sincere got this, that reducing marginal tax rates will lead to growth. it's neither supported by my personal experience or the experience we have had as a country for the last 30 years, that growth has been higher when the tax rates were higher. >> garrett, others in your position in terms of allocating capital particularly to early stage or companies would argue that more regulation, an increase in the capital gains tax, some continued uncertainty is leading them to looking for, you know, higher potential returns than they otherwise would and therefore not allocate capital as aggressively. is that not the case for you? >> i think it's about markets. i think it's about markets and the pace of technology and the pace of technology to some degree is governed by -- the lighter side of the venture business grows out of the investments we have made in
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biomedical search. obviously i benefitted personally enormously from the investments we made in the country in what became the internet sand business in general is supported by the investments we make in infrastructure and bridges, and so on, roads. so the question is are we investing enough in society in order to grow a high-tech nothing economy. and i believe the answer to that is no. >> the trouble is, herb, finally before we let you go, this 1% that we're discussing is a very wide banged. you all work $300 million $350 million that tax rate at that point may be very punitive for someone $250,000 as an annual income for a family. >> at $250,000 there would be no increase at all. this is a marginal tax rate, so
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we're only talking about four cents out of every dollar above $250,000 and that's a aren't level for society to decide that those who are more fortunate can help society its needs. >> mark couban is watching this very program and tweets, amen to the guy on cnbc saying he has not discussed tax rates in his investment making criteria, i haven't either. there's a rainbow of millionaires and some out there are barely millionaires who are barely staying million airs who say you want to pay higher taxes, write the check and go away. >> i can only contribute my own experiencing which is that it has made no difference in terms of my investment, you know, practice and i believe that, you know, we have to make choices as a society.
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the things that we want to accomplish, there are some things that we can only accomplish together. accomplish. there are some things we can only accomplish together. if we want to invest in defense or we want to invest in infrastructure, we want to invest in our people, it takes money and we are at historically low levels in terms of taxation, especially on the upper 1%. it's time to revert at least to the levels that existed under president clinton. >> mr. gruenner, it was nice to meet you. >> thank you very much. belease's prime minister calling john mca fee bonkers wondering why he's on the run inside the country when authorities want to talk to him about his murdered neighbor. we'll get his response. that's next. ♪
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welcome to the world leader in derivatives.
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welcome to superderivatives. belies's prime minister is urging john mcafee to help them with a murder investigation. robert frank has been following this bizarre story since it began. send it back to you at hq, robert. >> thanks, david.
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this is turning into the jungle man hunt that captured the world's attention. last night mcafee said police had arrested his body guard, his housekeeper and a taxi driver. mcafee is the founder of mcafee antivirus software once worth $100 million. he's wanted for questioning for the murder of his neighbor. police confirmed that they have arrested the body guard. they said other mcafee employees are being held and may be charged. mcafee told us this is all to coerce him to come to police. he had nothing to do with the murder and he fears the police are trying to kill him because i've been, quote, an outspoken critic of the government. mcafee has been criticizing when we asked about this the report that he's making crystal meth, dealing with drug ganks. mcafee said i wouldn't know how
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to make it, sell it, or compete with the mexican drug cartels. david, all very, very strange by the day. >> it is, indeed. any chance that he's going to turn himself in? is he truly worried? i don't know the police force. i haven't dealt with them personally, robert. i can't say whether they are, you know, above board or not. >> well, this is a question we're going to ask john today. what is the end game here. he says he wants to stay in be lies. he loves the country. he believes justice will prevail. he's not coming out of hiding. what is the end game? what is the plan? maybe he hopes the government will back down out of embarrassment because the prime minister coming out today saying this is ridiculous, we're hoping this doesn't drag on. we don't know where this will go. >> hang on, the prime minister of be lis. this is the outback of nowhere. david is standing by if required to go back to belise to meet him
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again. >> what do they have, 20,000 people? it's not a large country. >> david, there's a tel com deal now involved. i think this is perfect for you. >> thank you. >> telecom deal, the jupgle. i think you need to go back. >> it could be very exciting as it was to fly in those ultra lights that we just saw in those pictures. robert, as all the, thanks for your continued reporting on the story. >> thanks, david. >> chief mcafee correspondent. we are 46 days away from potentially going over the fiscal cliff. richard bernstein will tell you what's happening next. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens,
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which isn't rocket science. it's just common sense, from td ameritrade.
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market down 27 points. what's up tonight on "fast"? >> we're going to take a deeper look at could it impact oil supplies? tonight is a date david has marked in his calendar. it is the release of "twilight", the last breaking dawn movie. >> coming into work. i'm so excited. >> and then paul jacobs, the ce qualcomm. >> robert pattinson was ringing
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the bell. david was like -- >> thanks, guys. we'll see you a little bit later. let's start this hour with breaking news on oil inventory shares. >> we are getting the report from the energy department. we are looking at oil prices slightly under pressure. $86 a barrel. oil supplies increased by 1.1 barrels. up by 1.1 million barrels. gasoline supplies were down by 400,000 barrels and fuel supplies were down by much more than expectations, 2.5 million barrels. a big slide in the fuel supply level and we are seeing heating oil and reformulated gasoline futures rallying on the number while oil is down under $86 a barrel right now. keep in mind we are continuing to see the recovery efforts and the refineries coming back on line on the east coast. that has a lot to do with what we have seen here.
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we've seen that pick up substantial substantially. pretty much in line with what analysts anticipated at 86% capacity up .6%. we are seeing the east coast gas come back. gas traders were wondering about the refinery utilization. we are starting to use the crude and process it. we are seeing the supplies not necessarily as high as some analysts expected. we are seeing ample supply, well above the five-year average. that is another reason why we're looking at slightly depressed oil prices at the moment. send it back to you. >> even with those gaza headlines. thanks so much, sharon epperson. the markets, the dow more than 180 points for the down side as we lost steam in the afternoon. continues to loosen ground. currently down 31 points. s&p off 2.5 and nasdaq down 11. tough morning in terms of data, disappointment on planes, philly fed, eurozone recession.
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leading the s&p. net app. and then retailers, the biggest losers today. roth stores, walmart, limited, children's place all down sharply on worse than expected quarterly results. roadmap for this morning, markets struggling to find their footing as the fiscal cliff continues to loom. we'll talk with one expert who's still bullish on the u.s. stocks. plus a new report that says the department of defense has transformed into the department of everything. we'll find out how your tax dollars are being spent. the new vc funds that are betting big. they'll tell us why the big data department could be a billion opportunity. the house panel blaming john corzine for the m.f. global collapse. nan heyworth will join us live. we'll kick it off with retail. walmart missing the street view
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while target quarterly profit does top the forecast. courtney has a slew of news. >> hi, carl. there's a lot to go through. walmart's third quarter wasn't its strongest. the world's largest retailer reporting earnings of $1.08. that beat the street by a penny. increase of more than 3% but shy of what analysts had expected at almost $115 billion. walmart, those sales were negatively impacted by currency to the tune of $1.7 billion. the retailer is refirming and narrowing. the forecast is 4 point $88 to $4.93. it was within the retailer's forecasted range albeit at the lower end. walmart's fourth quarter straight of those positive comps that they faltered for some time. when it comes to holiday, walmart through the end of q 3, $300 million more in lay away. more than last year. early november sales have actually also been stronger than expected.
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jobs, the cost of gas and rising food prices though are its consumer's top concerns. since allegations surfaced that walmart violated the foreign corrupt practices act walmart has enhanced its compliance program and now says, quote, inquiries or investigations regarding allegations of potential spca violations have been commenced including but not limited brazil, china, and india. rival target posted strong quarters for past earnings stinlts at 96 cents per shares with revenues of $16.9 billion. target's full year guidance does bracket the street's forecast. com sales were 2.9%. fourth quarter the big test. christmas is coming. carl. >> not too far away now. next week starts it off. get ready, courtney. courtney regan over at hq. some of the big investment
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advisors are at the schwab investment conference. incompetent vesting and the fiscal cliff tochg the conference. richard bernstein is joining us. he's a portfolio manager and a cnbc contributor. i know he's enjoying the fine dining in chicago this week. rich, good to have you. >> yes, carl. its satisfy a rather intimate affair here in chicago. mcormack place always brings people together. rich, i've got to ask you about, we did get one big uncertainty resolved in the election and since that time we've lost almost 700 points. gaza's blowing up. we've got worries about the cliff. the data is coming in, very noisy about sandy. you've been bullish. has your confidence been buffeted at all? >> i wouldn't say, you know, if we look out longer than a matter of weeks, no, i don't think our confidence has been shaken one bit. i've never been very good at telling you what's going to happen in the next week or two or three weeks so i'll reserve
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comment on that. i think what people still don't recognize is the fundamentals of the u.s. economy are improving. they are not improving at the rate that we'd like but they are improving. more importantly, we're about the only major economy in the world that you can say that. so i think we're very unique and that's why we're still bullish. >> there's been a lot written about how good the recovery actually has been even though people don't want to talk about it relative to other countries, our debt. i know you look at debt to gdp. not as immediate a danger as some want to make it. there is this notion that it could all be ruined, all of that good news could be doused if, in fact, the fiscal cliff talks don't go the way people want. >> oh, i think there's no doubt about that. i don't think i'm going to tell you anything original, that if the guys in washington don't get together and actually act like grown ups, we're in big trouble. that's not just for us, that's for the entire world. and so, you know, i think it's
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time for them to start saying that everybody -- they have to stop saying it's time for everybody to git together and work and it's time to start working. it's hard for politicians to actually do that. they're saying we have to get together and do something, push aside partisanship. fine. that's been said and done, now do it. >> assuming you don't have a lot of confidence on that going well, what is the play? you talk about if you're in a dividend name that yields 5%, do you sell that? >> well, i think there's a number of things you want to do here. if you really think we're going over the cliff big time and we're not recovering, there are things you definitely want to do. the best hedge out there is basically a 30 year zero coupon bond. we've seen that already as treasuries have rallied into this. number one, we're going to slow the economy. we're going to slow the global economy. there will be a scarcity of high quality assets. people will rush to those high quality assets. we'll start fixing the fiscal
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problem. that's very good for treasury. kind of the ultimate hedge out there is the 30 year zero. >> rich, you're obviously on the ground in a very concentrated population of investors. is there any doubt in your mind that the cliff leads every discussion or is there -- i mean, is it more about this spat between the eu and the imf, the eurozone going back into recession? does anything come close to competing with the cliff talks? >> no. i spoke at another event yesterday in orlando and that was, you know, the big question all day long was about the fiscal cliff. nothing else is even close. so to that extent i think we have to realize that this is not an unknown risk and it's kind of taking on a y2k aura. you have your countdown that shows minute-by-minute counter. the fiscal cliff may turn out to be like a fiscal ditch. if it turns out to be a ditch,
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then i think the markets will respond quite well. i'm not sure they're going solve everything. i'm relatively sure they're not going to solve everything. if they can make some real strides here, meaningful strides, i think the markets will start responding much more positively. >> finally, rich, i know you've been a fan of smaller cap trades. does that remain the impact? >> yeah. recently the russell has gotten socked a little bit to say the least, but i think if you look at profitability, where profits have really come under pressure in the united states is from large cap multi-national companies. the dollar has been appreciated. foreign economies are slowing. that whole bet on foreign growth is coming back to bite someone. whereas, the domestic economy has been doing quite well. the profit cycle is quite a lot stronger than the profit cycle for the s&p 500. >> always good to talk to you. is that a rise and vote pin on your lapel? >> yes.
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it is a rise above. >> don't say beneath. that's all we ask. rich, thanks so much for kicking off the hour. we'll see you soon. rich bernstein in chicago. for more on the schwab impact 2012 conference check out investor summit.cnbc.com. let's get to the capital markets op ed this morning. gary kaminsky tells us what's going on with this market. >> carl, good morning. thank you very much. first i want to apologize for yesterday. i pointed out this trend that we've seen for the last several weeks which is you get the high of the day around 11:00, 11:30. i thought we bounced out as a result of it being overcrowded. apologies to that. that takes me back to why i'm here at pcr 1. i came into the control room because i wanted the team not to get into my ear and focus on what i tell you. this could be the most important thing in what i've discussed here. my mission statement when i came to cnbc was very simple. all i wanted you to know is what
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the professionals in the industry, what they're hearing every day, what they're discussing and how it impacts the decisions they make. that's the only reason i'm here. that's the only mission statement. i must tell you in the last couple of weeks i've become deeply concerned that a pattern -- another pattern that i saw in 2007, in fact, i saw in 1999 and 2000 as well is beginning to emerge. what that pattern is is you have a number of analysts, strategists, portfolio managers are saying one thing but in fact they're doing something else. what's the point? back in 2007 you had everybody saying that they were going to stay fully invested, that they loved equities, that the housing boom was nothing to be worried about. at the same time many people were beginning to short sell the market and sell. you know what happened with the nasdaq in 2000. what i see happening here is very simple. people are saying one thing and they're doing another. this is the point, carl. everybody knows that the last four years had nothing to do with the white house or anything in washington, d.c.
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stock markets around the world went up for one reason and one reason only, central banks pushing up equity prices. what is happening now is very simple. let me whisper and come and tell you this. >> carl, go back to you. we'll finish this in a second. >> no, no, no, i do have some breaking news, gary. i apologize for that. bertha had breaking news. >> yes, carl, b.p. agreeing to pay a record criminal fine, over $4 billion in order to resolve the criminal case involving the well explosion from 2010. the previous record fine paid by a company on criminal charges was pfizer, over $1.2 billion over marketing of baxtra. the resolution includes $4 billion to be paid over five years. that will resolve all criminal claims with the department. a resolution that involves all security claims with the s.e.c.
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$525 million paid. eric holder, the attorney general, is expected to announce this deal later today in new orleans. we don't have a time yet, carl, but we expect it to be this afternoon. back to you. >> bertha, those are some amazing, amazing numbers. a.p. had it earlier this morning. thank you very much with the breaking news desk. want to get back to gary. >> i have to make this point. i came into the control room. i didn't want to be interrupted. you have a bunch of strategists out there. adam parker, morgan stanley, goldman sachs, they are saying something and they're putting it in print. many other people are not putting it in print. it's simple. the next four years as it relates to the obama administration is not positive for stocks. they don't want to say it. they don't want to write it. but you can find it everywhere. the evidence is mounting all over the street that the last two weeks there is a massive outside allocation shift as a result of it. this is what i want to say. i find it very disturbing when people walk into this building, come on air, talk about the
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portfolios. if you're a loan only manager you have to try to find stocks that are working but, remember, there's nothing wrong with holding cash or saying it like you think it is. i want to point something out here. this is the wellington letter. he writes he's been doing this for 35 years. this is what he said in the edition that came out yesterday. bat ten down the hatches. protect your assets, your business, your job. this is no longer a theoretical exercise. i want to tell you, carl, i find it disgusting that a lot of people are saying that to their clients and they're saying that across the board but they're not putting it in print. if you're saying something like that, have the guts like berurto put it in print. i would like to see people put it in print as opposed to whispering it behind the scenes. >> i just want to understand though, gary, you're saying four years of stock market action had
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nothing to do with the president but the past week and the past 600 points are all about the president, is that right? >> no. what i'm saying is that the stock market went up over the last four years in many of these people's opinions. i'm just passing on what i am hearing and what people are saying. the stock market went up in spied of what might have been happening in washington. the major moves in the equity markets, i don't think anybody wants to debate with me on this, was driven by bernanke and the central banks arntd the world. the last several weeks has been just a recognition that the bernanke fed cannot do anything further so now we're stuck here with the issues related to the fiscal cliff and with the fact that there is a recision around the corner, unemployment's going to go up. as we pointed out all this week, capital spending is going down. we've got to go. i think it's important that people recognize this is what's being said, its it's just not
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being said on air. >> investors asking big questions. let's get to the cme. rick santelli going to talk some regulation this morning over at the santelli exchange. good morning, rick. >> we are, indeed. it's a new term for the president so i'm sure there's going to be a lot of new discussions about the conservatorship. remember those? freddie, fanny. including the federal housing regulation in this discussion because this week, maybe as early as tomorrow, we'll learn if there needs to be a bailout for the fha. the reason for the bailout is they're required to have a 2% set aside. we haven't heard much about it. probably because nobody over the last three years considered re-election, i'm just not talking the white house, wants to ever delve into the gse problem, the conservatorship, the fha because it's costing literally as much as 150, maybe
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as high as $300 billion when it's all done. the fha is really disturbing to me at this point for several reasons. first of all, they're only underwriting or guaranteeing 1/3 of the mortgages but they're the ones that are 3.5% down. not nearly enough down and it represents a lot of the ills that caused the housing crisis to begin with. when you join them up with freddie and fanny, now you're talking about 90%. fha had 100,000 mortgages 90 days past or in foreclosure than they did last year. they guarantee about a trillion on their own. this is a huge topic and it's even a bigger topic considered that without the white house warrantying or needing to worry about re-election there is this concern again that maybe there's going to be a blanket refi or a big principal reduction.
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look at mortgage securities. the same mortgage securities whose rates went to all-time lows after the quantitative easing of the fed in terms of buying mortgages. they've reversed lately because especially some of those seasoned securities are going to be in big trouble if that blanket rephi actually occurs. a lot of states want to secede from the union. seven have reached the threshold of 25,000 signatures where the white house has to respond. the 15th largest ee connie in the world, mcormack, texas, seems to be top of the world. going from success to secession seems to be a big jump, i lot of texans are doing things that are completely the opposite of what a lot of the programs to fix the economy are. i guess that's why they want to seceede. >> up next, beef jerky, cling ones and your tax dollars. believe it or not, there is a connection between those things. we'll tell you what it is after
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the break. having you ship my gifts couldn't be easier. well, having a ton of locations doesn't hurt. and my daughter loves the santa. oh, ah sir. that is a customer. let's not tell mom. [ male announcer ] break from the holiday stress.
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fedex office.
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. there's a new report out on waistful spending and you won't believe what the report says. >> good morning, carl. senator tom coburn is a republican on capital hill. he has a report out what's called waistful pentagon spending. he said the department of
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defense has become the department of everything. he's particularly interested in darpa research spending. take a look at what he found. he focuses on a couple of particular studies including a study on cling ones. darpa paid $100,000 to sponsor a discussion series. one topic was implications for christianity if extra terrestrials are discovered. another one that co burn found was pentagon spending on better beef jerky. the foreign comparative testing program spent $1.5 million developing jerky that features flavors including salami, chipotle and turkey. this beef jerky is shaped like a fruit rollup. they also studied the politics of goldfish. darpa paid $5.2 million for a study that included goldfish. the study analyzed group behavior in goldfish and it
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suggested implications for human political behavior based on the way the goldfish were swimming. sarl, senator coburn said you can take $67.9 billion a year out of the pentagon budget very easily by going after a raft of programs like this. >> eamon you could hear the groans on the floor. having eaten a couple of mres i can almost see the jerky. the goldfish and the "star trek", that's the kick. >> i want to try the chipotle flavored beef jerky. >> i'm sure they can't wait. thanks very much. find out what they have to say about the house report officially blaming john corzine for m.f. global's collapse. we will go there after the break. sector breakdown. energy leading the way. utilities and telecom is performing the worst.
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welcome back to third hour of "squawk on the street." always one of my favorites. i have a favorite guest. james coutoules. he's been active trying to get all the money back for m.f. investors. today the subcommittee's report on m.f. was completed. james, i read at least the early parts of the report that were out yesterday and it certainly does seem as though they're not very kind to how john corzine led this firm down the road to destruction. your thoughts? >> i agree completely, rick. they shouldn't be kind. this is corzine's fault. corzine since the start has been trying to shift blame off of himself saying oh, he doesn't remember in congress because he doesn't have access to his notes. oh, the board said it's okay but, you know, if those 30 to one incredibly risky bets would have paid off, he would have taken all the credit. it's time for him to take the
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blame and make customers whole. >> the report doesn't give a direct avenue for any prosecution. basically they say that's up to people like you and regulators. are you disappointed about that? >> no, not at all, rick. i've met with most of the house financial services including committee chair and they're adamant that the scope of the report was not to assess criminal charges. so while, sure, i'd love for the criminal case to be made in there, that just wasn't their job. their job was to assess civil liability. if you want to read about the criminal charges you can read the piece i wrote about the case against corzine on zero hedge. i'm 100% convinced that he is a criminal and he does belong in jail. >> let's switch gears for a minute, james. another issue that has continued to bug me since day one since the end of october when all of this occurred last year and that is that moving those funds they shouldn't have moved customer segregated funds was papered up
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with statements that were fraudulent, and this was still in october. the cftc knew these statements were fraudulent but yet they never brought it up. does this bug you as much as it bugs people in chicago? >> it does. and cme chairman duffy testified before the senate ag committee that they were provided false reports and he talked about corzine's testimony. they asked cme to stop its criminal investigation. >> well, what's even worse though is let's go back to the cftc part. currently the head of the cftc, mr. gends ler is proactive. all this time later he continues to work on it. i find that very scary that they didn't sneak up, the cftc didn't speak up on information they
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knew at the time that could have made a difference in how segregated funds were subordinated and classified but they didn't speak up. should mr. gensler still be writing regulation? is there any call for mr. gensler to step down based on some of those issues from october of last year? >> i think gensler's behavior has been a disgrace. we all know he goes back a long ways with corzine from their golden days. they're friends. he would cancel meetings to take corzine's calls and allow him to lobby for these loopholes. dw gensler is a disgrace and i'll go on record and say he should step down. bart schuller should be there. >> i'll tell you what, he seems to be truly concerned about the markets and especially the fact that the futures markets didn't play any part in the crisis yet
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they seem to be looking at a whole lot more regulation. we're going to have to call it there, james. thanks for coming. carl back to you and still no real closure on mf or jon corzine. >> rick, some are pointing out if it had gone a little bit differently we might have been referring to corzine as the potential treasury secretary. >> that's the bullet there. >> thanks a lot, rick. still to come, angel investor and husband of yahoo ceo melissa meyer zachary bogue on the opportunities in big data after a break. seball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. sfx- "sounds of african drum and flute"
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got the eurozone officially in recession again. second time in four years. that explains the map we're looking at today. >> yeah, a lot of investors moving to the sidelines. the volume very low. they are very concerned clearly about what is happening with the fiscal cliff. therefore, world stock markets moving forward. you mentioned we have the technical recession as a result of a contraction in the third quarter of .1%. the figures are not as bad as some people feared. stocks in germany still grew a little bit. however, growth is absolutely key moving into the fourth quarter. it may be the biggest red flag actually for many people in the market. and you're beginning to see that in the earnings season of course, in the estimates for the fourth quarter. jpmorgan suggesting the contraction in the third quarter wasn't as bad as you thought. by god, you could get pay back in the fourth quarter. in the midst of all of this,
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something is going on within retail and specifically within closing retail. the sales figures -- retail sales figures for the u.k. were very poor. one of the biggest retailers. clothing taking it on the chin down 2.1% on the month. h. and m. has very bad sales for october. in the meantime, a number of companies continue to disa point. today a lot of the insurers are not doing so well with those. they came through with a disappointing set of figures. reuters reporting that as a result of the bad situation for the economics of europe that analysts have taken their fourth quarter earnings estimates down 3.6%. just bear that in mind as we move forward. also in europe in contrast actually to what is happening here in the united states, airlines have been quite badly hit. i'm not sure if this is a reaction to what's happening in the middle east and the process that long haul flights could be canceled but certainly air france klm has taken it on the
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chin. these are low cap stocks. they are avenue good for a trade. i suspect that's what's happening here, carl. one more thing as i hand it back to you, we keep talking about the standoff on greece. that moves to tuesday. we knew that. that's when they're going to try to sort it out. christine will legasse is cutti short her trip. we are not going to forgive debt on greece. the standoff continues. >> her taking a harder line than yuker. >> it is a real issue. >> we'll see what happens tuesday. thanks simon. gary is back at hears focused on some mlps. that's a big topic lately too. >> yes, carl. that's because a number of you have written in. a piece of the journal pointing out how the mlp has been the worst performing sector since the election. many of you know in my previous
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life we were a major mlp investor. this was one of the pipe lines that got acquired. take a look. there's been an immediate sell on the election news. if you look back longer term we have charts of the major mlps. every time there's been a fear of the changing status, about 85% of the distribution has returned to capital. it has been a favorable tax treatment. you know history says that every time that these things have dipped down on fears of taxes, there has been a great buying opportunity. obviously low interest rates, the moves we talked about at the top of the hour with the central banks around the world has helped with the asset class tremendously for the last four years. many of you want to know do i think you have to sell these mlps. many of you have huge embedded capital gains. i don't know. in the past if you remember many of the times there was fear about changing of the taxation you had lobbyist groups down in dc saying, don't worry about it.
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about ten years ago you had a clown mcdet come out and say i'm 100% sure there's going to be a change and that was a buying opportunity. the answer is i don't know. that's why a lot of people say they don't want to sit around and wait. historically it would be a very dumb thing to do for the government to change this. this is infrastructure. we need the infrastructure and capital for investing. the simple answer is i don't know. the best investors in the asset class don't know either, carl. >> you always admit it when you don't. >> that's the great fear. this has been a great place to hide for the last five years. >> yeah. talk to you in a bit. >> a lot of people here are frustrated for various reasons. >> everybody thinks they can play the blowup in the market. they want to go along volatility. look at the s&p. we have another day where the
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market's just drifting south here, not great economic news and the vix which everybody wants to watch. it doesn't movie sensely. there's a one month on the vix. that's as flat as it gets. i get calls, letters, people saying is this a real index? how can you play it? since the election the s&p is down to essentially 5% but the vix is up only 1.8%. that's not significant. in theory you would think the vix should be up a lot more than that but it isn't. let me show you what i think is going on. remember, the vix does not play around with what the stock market is doing. it tracks what options buyers are doing. as far as i can tell, there's a lot of sellers of puts that are out there, not buyers of puts necessarily. so here's the vix. people are trying to buy this vxx. it's tracking closely with the vix itself. it's not moving right here.
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so let me show you what the s&p has been. since the election we were over 1400. there's the election. 1428. we're way below 1400 right now. that's the key option level. a lot of people, big money was buying puts here at 1400 to protect themselves. we're way below that. these puts that they have are in the money. what do you do when something is valuable? you sell it. that's balancing off. that's why the vix isn't going up. i want to point out what's going on with the dividend payers. look at this. if you want to go and try to play with the markets, short the market directly. don't go long volatility. the scs, this is twice the inverse. it's up 10% since the election. that moves inversely with the markets here. those are very short term ways to play the market. volume has been titanic. got to go quickly and show you
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the dividend players. they continue to get hit. here's the telecom index. lowest level since going back to june. another 1%. that's the down side leader. if you take a look at the utility index, this has been cratering partly on the concerns about hurricane sandy because some of the northeast utilities have been hit. this is the low for the year in the utilities. this has been hit by the dividend concerns. even the ret, their lowest levels since june. there's the direct effect on the market of fiscal cliff concerns. >> you've got that right. thanks, bob. see you in a bit. record fine for bp announced. now trans ocean, one of its own, bertha coombs back in headquarters. >> they're the operator of the rig winning a reversal decision in favor of maersk drilling in a patent legislation in the appeals court.
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the federal court reviews the motion. b.p., a record $4 billion fine pleading guilty to 14 criminal charges involving the mcconda well explosion. >> thank you very much for that. unbelievable story. when we come back, big opportunities and big data. zachary bogue happens to be married to yahoo! ceo marissa meyer. why he cease this as a multi-billion dollar economy. back after a break.
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♪ i know you want to leave me, but i refuse to let you go ♪ ♪ if i have to beg and plead for your sympathy ♪ coming up on halftime, dick gephardt on his dire predictions for stocks if the cliff deal doesn't get done. a rare look into the secretive world. carl, see you in 15. meantime, data collected invested in early stage companies. i.t. infrastructure and analytic space. they're trying to take a new approach to digging into that
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data pie. we have the co founders of data collected. good to see you. >> good morning. >> carl, thank for having us. >> this has been obviously one of the few bright spots in technology lately. it's been reinforced by some great news events in terms of new issues but, matt, where are we in the inning here? is this early days? >> well, one of our colleagues at renowned venture capital firm sequoia had a good statistic which is that in the last ten years 56 $1 billion ipoed have occurred in the space in which we invest and less than 23 have occurred in the consumer space. so we think that the bik data enterprise world is not only churning along quite nicely but there are many hundreds of billions of dollars of wealth
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creation events left to happen. we're pretty psyched. >> zach, it seems like the things that you guys have going for you is you guys actually read code, right? >> correct. >> you understand chip architecture. i would imagine the barriers to entry just in terms of understanding how this business works have got to be pretty high. >> absolutely. we're deeply religious about the technology. that's the way you need to be in order to invest in early stage big companies. if the technology is not there it's not an investment for data collective. >> talk to me about how the process of raising capital is going for you now. obviously we've got some uncertainties in the market. we have had a bit of a slip here. matt, getting easier, harder, no change? >> well, i think for firms with the right structure and the right historical results, that it is not trivial but not painful. so we're actually very happy
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with the progress we're making. >> zach, i'll ask you to be specific for those people who may understand the space already, what things to you are most interesting? can you break it down between things that are leveraged to a consumer versus a business-to-business kind of thing? also we've got comments from chambers and cisco about how u.s. enterprise is looking okay which flies in the face of a lot of concerns out there. >> for the most part we, enterprise, looks more interesting. we see a lot more big data plays that are sold into big corporations. that said, if we do see an interesting application that sits on top of a really interesting data set with interesting analytics that does apply to consumers, we'll make an investment there. >> go ahead please. >> i was going to say there are some really fascinating
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intersections of enterprise and consumer that are driven by revolutionary big data. one stealth company whose name that we can't disclose that we're privileged to be investors in is able to take the sort of soup random dna snippets and actually turn that into a very ordered, extremely map of someone's map of dna right down to the point that parents before they have children can understand exactly how their child might turn out, if there are any issues, take arranges. steve jobs would have known if he had cancer years in advance. >> oh, my gosh. >> some enterprises will use that and it will improve millions of people's health all around the world. >> i imagine that is some big data. of course, you're sitting next to a man who knows something about newborns. congratulations, zach, on mccallister. our thoughts are with you guys.
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>> thank you very much. >> we really appreciate it. >> there's a look of marissa meyer, zach's wife and mccallister who is one month old. >> when we come back a u.s. congressional panel blaming jon corzine for the breakdown. nan hayworth will talk about that report in a moment. i always wait until the last minute.
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the house financial
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oversight committee releasing its report today. more than 50 witness interviews and review of hundreds of thousands of e-mails from m.f. global. nan hayworth is joining us this morning. congresswoman, good to see you. >> good to be with you, carl. >> it's a tough story no matter how you view the debacle. the key findings as far as you're concerned? >> well, that jon corzine clearly had far too free a rein to become trader in chief without proper internal oversight within the company. the faulty practices within mf global that could lead to that kind of situation were not fully vetted by the regulators. there was incoordination between cftc and sec quite conspicuo conspicuously. the ratings agencies failed
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again. this is a theme to identify that the company was taking on inordinate risk. as a result, thousands of people's lives were ruined and this is a terrible thing. it should never happen again. >> yeah. a spokesperson for core sign said although he had not been able to review the whole report, the subcommittee apparently in his words did not find any evidence that mr. corzine acted in bad faith or did any wrongdoing. does that fit the spirit of the report? >> the spin they're taking is there was not an intention to do something wrong, but clearly things went terribly wrong and all the circumstantial evidence at this point does indicate that mr. corzine was at the helm of this ship and that he was driving it into a storm that it couldn't survive. >> one of the recommendations of the report, as you know, is that congress legislate some civil liability imposed on company
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officers for signing financial documents. does that mean that at this stage right now there is no grounds to charge either corzine or edith o'brien or anyone related to this? >> well, carl, what our congressional committee, what the oversight committee of financial services did, obviously it was our duty to provide oversight to investigate what happened to provide some sort of forensic analysis from the legislative and regulatory point of view. the trail of actual actions that could be considered culpable has not yet fully been defined as i understand it. >> feenl inally, i know you kno congressman's response on the report. i haven't gone over it with other democratic subcommittee members. are we drawing political lines on this thing? >> you know, i don't think so,
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ka carl. i think there's quite broad agreement that there are distinct areas within both the specifics of the culture of mf global and the actions of jon corzine and his top executives that can be acted on further perhaps and that there are distinct areas in which we can provide far better tools for our regulators and more efficient, effective regulatory structure. this is something that members of both parties can certainly work on pro ducttivelily. >> congresswoman, appreciate your time. important read. congresswoman than hayworth, thank you for joining us. >> up next. what steve vollmer has to say about the windows chief that just left the company. we'll be right back. if you are one of the millions of men
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